Employers, Employees Differ on State of Pay Equity

American employers are making progress when it comes to prioritizing equal pay among men, women and underrepresented groups, according to a study conducted for UKG by Harvard Business Review Analytic Services.

Despite that, employers and employees have different perceptions on how pay equity is being achieved, and barriers to implementing long-lasting change persist.

The study, Making Pay Equity Work for All, compared responses from 453 company executives and 3,005 employees of all levels. It examined strategies that separate pay equity leaders from other companies, as well as the impact that intersectionality has on the perception of pay equity progress. On top of that, it studied how leadership, pay transparency, clear communication channels and innovative technology tools can help organizations achieve lasting pay equity.

“This study shows now, more than ever, that organizations must recognize the importance of prioritizing equal pay in the workplace,” said Brian K. Reaves, UKG’s chief belonging, diversity and equity officer. “Disparities persist, and employers’ actions are not always enough or aligned with employees’ expectations.”

Pay Equity Problems

Fewer than half of employees — about 41% — believe their employers have successfully achieved pay equity, and 26% say their organizations have been completely unsuccessful in ensuring equal pay. The survey also showed that 49% of companies do not have a well-established pay equity plan in place.

One of the reasons for the divergence of opinion about pay equity is a lack of transparency. Forty-six percent of organizations admit they are not transparent in the area of pay equity. That leads to reduced awareness of pay disparities by employees and creates obstacles to speaking up or negotiating.

Another problem is the unequal effort put forth by companies to solve pay equity for groups of people. Employers say the majority of their efforts are directed at women, followed by people of color, ethnic minorities, members of the LGBTQ+ community, and those with disabilities.

The study said companies must implement changes if they’re going to establish an effective and long-lasting solution to pay disparity. Dedicated leadership, auditing tools, a commitment to transparency and clear communication are all foundational to the process, the report said. Employee surveys, bench-marking, business intelligence and analytics tools all offer companies the ability to learn more and improve their pay equity.

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